Credit Card Companies and No Refund Policies

Fiver

Fiver

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Jan 30, 2009
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Let's say you have an online shop or just a sales page that sells items, but it's stated in your TOS that you don't provide refunds.

What happens when someone bitches about their purchase by going to their CC company and asks for their money back? Whose side does the CC company take and does the fact that it states in your TOS that you don't give refunds make a difference to them?
 


depends on how valuable of a customer the CC thinks the individual is but, if they do get the chargeback approved, you're merchant fee goes up I believe. I might be wrong but I know its a big hassle from what I've been told.
 
the card-issuing banks don't care too much what your external policies are, they base the decision to reverse on their own internal policies. Since the most common reason for a reversal is "product/service not as described", there isnt really a "disclaimer" you can put in your own TOS that deal with it.

Some card-issuing banks (remember, its the banks, not Visa/MC, that are making this decision) do give credit for your TOS saying things like you don't refund shipping charges, or don't refund after a certain time frame, but it's still going to be based more on their policies than yours.
 
I've wondered about this too, but just dismissed the idea that they wouldn't effect the chargeback on the basis that I'm not their client - my customer is.

What I don't quite get though is how this can work with digital downloads. Surely once the software / data is downloaded you can't reasonably expect a chargeback since the customer effectively gets to keep the product free of charge!
 
microphone head said:
I've wondered about this too, but just dismissed the idea that they wouldn't effect the chargeback on the basis that I'm not their client - my customer is.

What I don't quite get though is how this can work with digital downloads. Surely once the software / data is downloaded you can't reasonably expect a chargeback since the customer effectively gets to keep the product free of charge!
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With digital downloads, you're going to have to deal with chargebacks. The banks really don't care that the customer effectively keeps the product for free. Like Mont said, it's all about internal policies.

Sometimes the issuing banks do things in your favor though. I've had a few issuing banks do a 3 way call to my call center when a customer called them to do a chargeback. I really appreciate that since it reduces my chargeback ratio. However don't count on this. Most of the time, the banks fuck you over.

Also SirKonstantine is talking nonsense. Everything he said was wrong. Sorry bro. You're a nice guy and all, but you shouldn't spread ignorant statements and hearsay.

Mont on the other hand knows what he's talking about. He's an authority on this topic since he's a lawyer and a offer owner.
 
SirKonstantine said:
I might be wrong but I know its a big hassle from what I've been told.
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Also generally speaking it's not difficult to do a chargeback on a "card not present" Internet transaction. Even if a merchant goes through the trouble to use that awkward 3D secure protocol (Verified by Visa, etc), the merchant still isn't fully protected from chargebacks. The merchant is only protected from fraud coded chargebacks. If the customer does a "product/service not as described" chargeback, then you're still shit out of luck.

You can of course appeal chargebacks, and win. But the consumer can then escalate the dispute and do a second chargeback; forcing you to repeat the process. A second chargeback would also affect your chargeback ratio separately from the initial chargeback. The dispute system generally favors consumers, but some consumers are lazy and give up if you win the initial chargeback. It's always worth it to dispute chargebacks.

Even if you successfully reverse a chargeback, it doesn't not reduce your chargeback ratio. That chargeback is still included in your chargeback ratio for that month.

Visa and Mastercard calculate the chargeback ratio by transaction count. Payment service providers that the merchant has a merchant agreement with typically calculate chargeback ratio by transaction count too, but some will also calculate chargeback ratio by dollar amount as well.
 
I had an ecommerce site for 4 years and before that sold herbals for 4 and I always won my charge backs. On the ecommerce site I only allowed for returns within 3 days and on some special order stuff NO refunds. But I had a verified product delivery. On the herbals I had a 30 day money back guarantee, if it was 40-45 days I still refunded but if it was 60 or they said they did not get the product I fought and ALWAYS won, just by presenting my policy and the verified delivery. If you get a lot of charge backs they want more money held in reserve so on the herbals I was more apt to just refund.
 
More than likely, the bank would pull your merchant account for not having a refund policy, and for lieing on your merchant application, which you would of had to do to be approved for the merchant account. Almost no bank out there is going to approve a merchant account for a company with a no refund policy.
 
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